Economic laws are real and they can't be violated or we'll pay the consequences of our mistakes. Many politicians have tried to become popular by selling dreams. They like to talk about social justice and promise a higher minimum wage, this sounds great in theory but it can be devastating. Many companies have to close or stop being competitive in global markets because they have overpaid workers. Countries with extremely high minimum wages are facing problems such as high unemployment and slow economic growth. One of the reasons that made China grow so fast the last decades was its economic pragmatism.
A mix of low taxes and realistic minimum wages created a successful economy.
Ronald Reagan believed in hard work, not in false dreams
The US has remained competitive for many years because it had a realistic economic policy. Ronald Reagan never believed in populism and the minimum wage remained stable under his government, this way the US economy created almost 16 million jobs. Bill Clinton added more than 21 million jobs, an impressive number. We also have to add that Ronald Reagan cut the income taxes from 70% to 28% for the top income group, this way he made the US economy more competitive.
Unemployment in Europe is higher than in the US
If we review the latest economic statistics, we'll see that the unemployment rate in the US is 4.3%.
The unemployment rate in most European countries is much higher than in the US. This is not an accident, many European politicians always pushed for a higher minimum wage and higher taxes, this way they suffocated the local economies. Add the Euro that made many European countries less competitive and we get a mess. The unemployment rate in Greece is 21.7%; in Spain, it's 17.2%.
It surpasses 11% in Italy and it's even worse in countries that were part of former Yugoslavia. In Bosnia Herzegovina it's more than 39%, in Kosovo it's 27.5%, and in Macedonia, it's almost 23%.
European countries with realistic economic policies
In Germany, unemployment is 3.8% and in rich Switzerland, it's just 3%. Those Central European countries have realistic economic policies, thus, they can create many jobs and maintain low levels of inflation.
Today, Germany has become the economic engine of Europe and it's been able to absorb many immigrants. Switzerland is the small giant that has international reserves of almost $700 billion, the biggest ones in Europe.
